MobileRead Forums - View Single Post - Amazon says 'will have to capitulate and accept Macmillan's terms'

Lemurion · 02-02-2010, 03:37 PM

One thing to consider is why publishers want the ability to charge a higher price for books in greater demand. Due to the nature of the industry, the vast majority of a publisher's costs are incurred before they see a single dime in earnings. That means the faster they can earn back those expenses, the more books they can publish and the better their chances of getting that next bestseller.

Publishers make most of their money on hardcover bestsellers. These are the books that pay everyone's salaries and subsidize the midlist. They are the financial foundation of the industry. Currently, e-books are a small part of the market, and don't have a large effect on hardcover sales. However, as e-books become more popular, $10 e-books will start having an effect on hardcover sales. Under Amazon's current system that won't make a big difference to publishers, because publishers are still making their standard cut.

The catch is that as e-books take a larger and larger market share, the Kindle store cannot continue losing money on the largest part of its electronic book sales. At some point they would have to either raise prices or renegotiate with the publishers for lower costs. At that point, publishers would have less money to spend on buying new books. They would have to take fewer chances on new authors and would eventually publish fewer books. Everyone but Amazon would lose.

Authors would lose because there would be fewer slots for their books, publishers would lose because they would make less money, and readers would lose because there would be fewer books for them to buy. Amazon would win because they would make more money and have a larger market share.

Macmillan is willing to make less money now so that they don't end up making MUCH less money later.

It's not a perfect solution, but it's better than the alternative.

Self-published and indie books are always an option, but the problem is that while some are very good - the bad ones are both much more numerous and very very bad (see "Night Travels of the Elven Vampire) - and there is no easy way to winnow the wheat from the chaff.

02-02-2010, 03:37 PM	#182
Lemurion eReader Posts: 2,750 Karma: 4968470 Join Date: Aug 2007 Device: Note 5; PW3; Nook HD+; ChuWi Hi12; iPad	One thing to consider is why publishers want the ability to charge a higher price for books in greater demand. Due to the nature of the industry, the vast majority of a publisher's costs are incurred before they see a single dime in earnings. That means the faster they can earn back those expenses, the more books they can publish and the better their chances of getting that next bestseller. Publishers make most of their money on hardcover bestsellers. These are the books that pay everyone's salaries and subsidize the midlist. They are the financial foundation of the industry. Currently, e-books are a small part of the market, and don't have a large effect on hardcover sales. However, as e-books become more popular, $10 e-books will start having an effect on hardcover sales. Under Amazon's current system that won't make a big difference to publishers, because publishers are still making their standard cut. The catch is that as e-books take a larger and larger market share, the Kindle store cannot continue losing money on the largest part of its electronic book sales. At some point they would have to either raise prices or renegotiate with the publishers for lower costs. At that point, publishers would have less money to spend on buying new books. They would have to take fewer chances on new authors and would eventually publish fewer books. Everyone but Amazon would lose. Authors would lose because there would be fewer slots for their books, publishers would lose because they would make less money, and readers would lose because there would be fewer books for them to buy. Amazon would win because they would make more money and have a larger market share. Macmillan is willing to make less money now so that they don't end up making MUCH less money later. It's not a perfect solution, but it's better than the alternative. Self-published and indie books are always an option, but the problem is that while some are very good - the bad ones are both much more numerous and very very bad (see "Night Travels of the Elven Vampire) - and there is no easy way to winnow the wheat from the chaff.